Now Buying Car Is Expensive Under Jaitley’s Budget 2016

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Now Buying Car Is Expensive Under Jaitley’s Budget 2016

Are you the one who was thinking to let your dream come true of buying a car? Well, sadly the latest budget diminish your car dream and make it little expensive.

In his Union Budget 2016 Arun jaitley has added an additional 1% tax on cars costing above Rs 10 lakh. The tip of the iceberg is if you were thinking to rest your soul with small cars it has also got expensive.

The key points affecting the car purchase:

  • 1 % infra cess on small petrol/LPG/CNG cars of length not exceeding 4-metre with an engine capacity below 1200cc
  • 2.5 % additional tax on sub-4 metre diesel cars with engine not exceeding 1500cc
  •  1% luxury tax on all the cars above Rs 10 lakh
  • 4 % tax on bigger sedans, MPVs and SUVs with higher engine capacity

CRISIL has reported that “the additional 2.5 to 3, 5 % cess applicable on vehicles will pull down the demand of cars and SUVs in the country. Currently the 40% sales are of diesel vehicles.”

Though the taxes will affect all the carmakers, the additional tax on diesel cars and Rs 4 per cent tax on SUVs, could go against carmakers like Mahindra & Mahindra and Toyota.

Car budget


On the new taxes Gaurav Talwar, Partner, Felix Advisory said: “The budget has imposed a tax collected at source of 1 % on purchase of luxury cars exceeding value of INR 10 lakhs. Further, an Infrastructure cess of 1% on small petrol, LPG, CNG cars, and 2.5% on diesel cars of certain capacity and 4% on other higher engine capacity vehicles and SUVs is proposed. The above measure will have an impact on the price of the cars, and may also impact overall demand.”

While on the new taxes announced by the government, Suraj Ghosh, Principal Analyst, IHS Automtive said: “A number of new taxes and levies will dampen sentiments in the short term. Another layer of tax doesn’t help the already complicated tax structure in the manufacturing sector. Need for GST further increases. After the SC ruling and NGT order, diesel cars and SUVs end up as the usual scapegoats, again.”

The increase in levy of tax has come to a point when the country has been sustaining with the increase levels of pollution.

For a common man, when the car dream has gone bit expensive you can relax yourself with House Rent Allowance(HRA) that has raised from Rs 24.00 per annum to Rs 60,000 per annum.